Co-op takeover: Today, we fight for the people shivering under blankets

By Meg Hillier MP

Today the Co-op Party meets against a backcloth of rising prices for gas and electricity. As the temperature drops, millions will start to see their energy prices spiral out of their reach. They will face the terrible choice between staying warm and running up debts, and turning off the heating despite plummeting temperatures. Those on pre-payment schemes will see their money run out sooner, and the gas go off.

Tens of thousands will slip into ‘fuel poverty’ – spending more than 10% of their household income on keeping the home at an adequate temperature. The NHS will once again be called upon to deal with the effects: hypothermia, bronchitis and other cold-related conditions. Some people, especially older, poorer people, will die this winter because of cold.

Labour has been warning for months that an energy bill crisis is upon us. As five out of the ‘Big Six’ energy companies hiked their prices over the summer, it was clear that the vast majority of bill-payers would face real pressure this winter. The ‘squeezed middle’, already hammered by rising food and fuel prices, will be squeezed even more. Ministers’ responses have been pathetic. Chris Huhne’s proposed suggestion was that customers should shop around for the best deal. But with companies’ prices rising in line with one another, that makes little substantive difference.

A leaked memorandum from Ben Moxham, David Cameron’s No.10 energy adviser a couple of weeks ago, suggested that the Department for Energy and Climate Change (DECC) projections for savings from insulation and greater efficiency were ‘unconvincing.’ Chris Huhne can’t even persuade people within his own government. Recent polling shows energy prices to be a top concern for the public. By January, it could be a full-scale crisis.

What would Labour do differently?

In office we reformed the energy sector, creating a more liberal market in the expectation that competition would lead to downward pressure on prices. Experience has shown that complex tariffs have made it harder to shop around (and in some cases people swap suppliers and their bills go up). When wholesale prices go up, so do people’s bills. But when wholesale prices stabilise, bills do not. So the lack of transparency around wholesale pricing structures leads to a suspicion that bills do not always reflect the true price of energy. The energy market is not a properly functioning market. 98% of us pay our bills to one of the ‘Big Six’.

So an incoming Labour government would seek greater liberalisation of the market, with easier entry points for new players. We would look at innovative new ways – such as pooling energy supplies – to allow smaller firms in. We would demand greater transparency and straight-talking about people’s bills and how they are calculated. We would do much more to secure warm homes and greater energy efficiency. We would look again at the role for a consumer champion to hold companies to account. We judge it an error for the Tories to abolish Consumer Focus, the current respected consumer watchdog.

Labour is especially keen to see more co-ops and mutuals operating in the energy sector.

For example, in May this year the Midcounties Co-operative Society launched Coop Energy. It is owned by its members providing full transparency on how the energy is priced and where it is sourced. It offers just one simple tariff.

Westmill Windfarm in the South East of England is one of the first 100% community-owned wind farms in the UK. Shares in the windfarm went on sale in November 2005 with £250 as the minimum investment. Priority was given to people living within a 50 mile radius of the site. The scheme is based on the Baywind Energy Cooperative model, the UK’s first and largest community-owned energy project set up in 1996 and run entirely by its 1300 members who receive an annual interest rate of 7 per cent gross.

Since the 1820s co-operatives have proved that alternative ways are possible to buy, sell and exchange commodities and services. The Rochdale Principles of the 1840s establish the need for co-operative ownership, democratic control, fair shares through the dividend and social responsibility. This model has so much to offer the energy market, just as it does everything from retail to agriculture, from financial services to football clubs. When local people have a stake in local renewable energy projects such as wind farms it creates community cohesion, greater environmental awareness, and a sustainable long-term supply.

For example, the Institute for Public Policy Research (IPPR)’s 2011 evaluation of the British Gas Green Streets project found that the projects made significant carbon savings, brought in new revenues for community groups, improved facilities and galvanised local people into taking action on energy. They also found that projects improved community cohesion in the process. The report found strong evidence to support the view that community energy projects can have significant effects on people’s behaviour and attitude to energy.

This is the way forward. The next Labour government, strongly reflecting the values of the Co-operative Movement, will have co-ops at the heart of the energy sector. Today, we fight for the people shivering under blankets. Tomorrow, we will ensure no-one has to.

Meg Hillier MP is shadow energy secretary and chair of the Co-op group of MPs